Setting up your campaign
Before you read this blog, our attorneys over at Nelson and Murdock want us to say this:
DISCLAIMER: This post is intended as general, guiding information and should NOT be used as official legal advice. Every candidate’s situation is different, and so are the laws governing each campaign. Consult an attorney, CPA, and/or your local elections official with specific questions regarding your campaign.
Whew! With that out of the way, let’s get on with it!
Running for office is complicated. For most candidates, this may be your first time establishing a legal entity, filing financial reports, or even setting up a business style bank account. We know how intimidating this can be, but never fear, FundHero is here!
To help you get started, here is a quick check list of the things you should do and know when setting up your campaign.
1. Research your campaign finance laws
Every campaign is different, and there are three legal areas which you need to understand before you start raising money.
First, what are your reporting requirements? Most campaigns must file financial reports with the governing elections official. Missing these reports can come with heavy penalties, including fines or being removed from the ballot. To avoid any issues, make sure you know all reporting deadlines, the process by which you file, and what information you need to collect. For example, do you need to report the employer and occupation of your donors? What about addresses for your expenditures? What is the schedule by which you need to file reports? Understanding and collecting the required information up front will save you huge headaches come reporting time.
Secondly, what are the legal contribution limits and restriction? Many, but not all, campaigns are limited to the amount they can receive from a single individual or entity. For Federal candidates, this is $2,700 per cycle, but many state and local jurisdictions have their own contribution limits. Learning these upfront will save you the embarrassment of having to refund a contribution from a major donor.
Finally, are there restrictions on who you can receive contributions? For example, many jurisdictions do not permit candidates to receive contributions from corporations. Some restrict those with government contracts from giving to political candidates. In most cases, it is the responsibility of the candidate to know the laws, so make sure you understand who you can and cannot solicit.
2. Establish your campaign committee
Nearly all candidates and political groups must create and file official paperwork to establish a campaign committee BEFORE they start raising money. Committees usually require two or three people to officially declare leadership roles such as treasurer, secretary, and/or candidate. Don’t fret over specifically who needs to fill these roles. You just need someone you trust and who will sign the paperwork with you. Often times, these roles are filled by the candidate, spouse, good friend, and/or colleague.
3. Get an Employer Identification Number (EIN) from the IRS
Regardless if you plan to have official “employees,” it is always a good idea for your campaign to have its own tax entity and not be tied directly to your personal social security number. Most candidate and political committees are classified as 527 Exempt organizations by the IRS. While this classification does not mean contributions are tax-deductible (because they are not), it does mean most candidates and local political committees do not need to file annual tax returns. More details can be found on the IRS website.
Most political campaigns can get an EIN entirely online from the IRS in just a few minutes. To get your EIN, visit the IRS website.
4.Set up a separate bank account
More important than an EIN, your campaign should have a bank account separate from your personal finances. In fact, this is a legal requirement for many campaign committees. When setting up a campaign bank account, you’ll need your EIN and likely campaign committee paperwork mentioned above. Most candidates set up a simple, no-interest free checking account at whatever bank is convenient for the candidate, treasurer, or whomever is likely to do the deposits for your campaign.
5.Create an legal organization
To obtain addition separation between your personal finances and campaign, some candidates will set up separate legal organization beyond the campaign committee. While there are many forms this legal entity could take, an Limited Liability Corporation (LLC) is often the simplest and easiest. These can often be done online and many states offer template Articles of Organization to assist with set up. Contact your state’s department of commerce for instruction on how to set up an LLC.
6.Obtain necessary licenses or permits
Additional permits and licenses are sometimes required, depending on the jurisdiction. For example, sometimes a campaign will get a business or other license required by their local city, county, or state government. Contact your local elections official to see if you need any additional licenses or permits for your campaign.